2025/05/112025/05/11 The ‘C’ in C Fund stands for ‘Concentration Risk’ The ‘C’ in C Fund stands for ‘Concentration Risk’ One of the tenets of Portfolio Risk Management is “Don’t put all your eggs in one basket”. This is known in the financial management industry as “Unsystematic” or Company-Specific risk. It’s the risk you are assuming when you hold a concentrated position in a single company, and that company faces financial troubles due to a change in consumer taste, leadership changes, scandals, or lawsuit. So, what’s a concentrated position? Conventional wisdom advises that you have a ‘yellow light’ once a single company makes up 5 percent of your investments, and you have a ‘red light’ at 10 percent. Now that we’ve established this, lets look at today’s composition of the S&P 500, represented in TSP by the large company ‘C’ Fund.The top seven companies make up almost 30 percent of the S&P 500 / C Fund: Microsoft (MSFT) – 6.74% Apple (AAPL) – 6.17% Nvidia (NVDA) – 6.00% Amazon (AMZN) – 3.73% Meta (META) – 2.74% Broadcom (AVGO) – 2.01% Berkshire Hathaway (BRK.B) – 1.99% It gets worse. Google/Alphabet is split up in to ‘A’ and ‘B’ Class shares. Put these together and Alphabet/Google makes up more than 3.3 percent of the S&P / C Fund, leapfrogging Google/Alphabet in to the number 5 spot: Alphabet Class A (GOOGL) – 1.85% Alphabet Class C (GOOG) – 1.51% So, right now you’ve got 33 percent of your ‘C’ Fund in 8 companies… The S&P 500 is essentially the “S&P Five”. They’re all good companies right now, but things could change. The ‘C’ in C Fund stands for ‘Concentration Risk’ Need some recent examples? Remember what happened to nVidia stock during the early 2025 news about China’s DeepSeek AI product? It tanked more than 17 percent overnight. Also, Apple just announced it expects Google to re-evaluate the $20 Billion per year it pays Apple to make Google Search the default search engine on iPhones. People are shifting over their search preferences from Google to AI-based products like ChatGPT or Microsoft CoPilot. In fact, Google searches on Apple devices dropped for the first time on record last month. $20 Billion per year is a LOT of revenue to lose, even for Apple and Google. So, what should you do in your TSP or 401k? Consider diluting your concentrated positions in the “S&P Five” by adding some of the “I” Fund to your portfolio. You can do this on your own, or use a Target Date Fund like a TSP Lifecycle fund to spread-out your holdings. You could even use the TSP Mutual Fund Window and pick out some low-cost Utility, REIT, or Value index funds to try and dilute your positions in the “S&P Five”. Just know that right now… The ‘C’ in C Fund stands for ‘Concentration Risk’ Related Investing Retirement Thrift Savings Plan FERS BenefitsLifecycle FundsSaving for RetirementThrift Savings PlanTSP